By John Byrne |
Mayor Richard Daley said Friday that government needs to get out of the
convention business and consider more changes to rules at McCormick
Place than those suggested by an interim board running the troubled
lakefront center.
“I believe you’re going to rent the space out.
You’re going to rent the space out, a person comes in, takes the space,
and he or she — that organization — contracts everything out,” Daley
said. “The only thing McCormick Place is sent is one bill for rent.
They’re responsible for all their contracts and subcontracts, and all
the workers that deal with that convention, and not McCormick Place.”
“Get out of that business. (McCormick Place) should be basically a shell,” he said at a news conference to welcome a biotechnology trade show McCormick Place will host early next month. “And the only thing we do is PR. The only thing we do is sell and bring conventions here, and basically the operation is the show manager running those shows, and not McCormick Place.
“This is all part of the market,” he said. “They get their own contractors, subcontractors, they get their own workers, they do everything for the show, and McCormick Place does nothing except rent the space. We cannot get back into the old ways of doing business.”
Daley said he doesn’t expect the interim board’s recommendations to be the final word on the future of the convention center. “I think there will be a lot of suggestions,” he said. “I’m hearing from a lot of show managers that came in, different conventions. They want to be able to make more recommendations about how they can compete in a global way and a national way to keep the conventions here.”
Without significant changes, McCormick Place will not be able to compete, the mayor said.
“If they don’t, then you’re back to sending bills from McCormick Place,” he said.
“If you get a bill from McCormick Place, this costs you $50, right here,” Daley said, holding up a bottle of water. “Just to bring these four bottles here, and you look at it and say ‘$50? I could bring it in myself,’ but you can’t.”
The high cost of mounting a large convention at McCormick Place was driven home by Jim Greenwood, president and CEO of Biotechnology Industry Organization. Greenwood said his members love holding their annual event in Chicago, but would need to take the expense of McCormick Place into account before returning.
“The competition is stiff, and we have to take a variety of factors into consideration, and one of them is cost,” Greenwood said as Daley and Gov. Pat Quinn looked on.
“Certainly, Chicago is an expensive place to hold a convention. It’s inordinately expensive, and that will be a consideration in the future,” Greenwood said. ”If it becomes less expensive to bring a convention to Chicago, we’ll be more likely to come back.”
Gov. Pat Quinn said the recommendations of the interim board should be considered before any decisions are made.
Among other things, the interim board recommended that McCormick Place trade shows could choose their own electrical service, order food from outside the building, deal with fewer unions and potentially do more of their own booth setup. The recommendations are aimed at cutting exhibitors’ costs, a white-hot issue that has sent a couple of shows packing for lower-cost cities.
“It’s an important issue,” Quinn said Friday. “These conventions are job farms,” he continued. “They’re opportunities for our state economy and our local economy. So I think it’s still too early to tell what the best blueprint for the future is. I think saving money — I’ve worked with the mayor on that — is a very important mission. Also, it’s important that we show Illinois, and Chicago, to the world in a positive light.”
Referring to Daley’s idea, Quinn said, “I think it’s a point of view that needs to be taken into account. The mayor’s an important person. But I think we have a specific interim board that was set up to take testimony and have hearings about this matter, and I think it’s important to hear from them, too.”
What about the Biotechnology Convention, I want to hear about that.
Was that the mayor talking like Shakespeare?
what a perfect idea! privatize it so he can let his cronies in on all the insider deals to have someone other than the City SHAKEDOWN the show exhibitors, so he can feign innocence. Chucky, basicy you’re a genius!
It would be much better if Daley would get out of government.
If you can gouge somebody for a profit and get away with it, you will do it every time.
That’s basically what the unions do at McCormick place. It’s outrageous that in order to enrich themselves, the unions are costing the city to lose conventions (read jobs). Aren’t the unions also blocking a Wal-Mart that can revitalize poor African-American wards because they want a wage that is out of whack with the suburbs?
And then there’s the teacher’s union that is going to bankrupt CPS, and then there’s the bus union that won’t yield on minor concessions.
Does somebody notice a pattern here?
Those that work in private business know the unions are a gravy train for job benefits and salaries. 100 years ago workers were taken advantage of. 100 years later, the situation has shifted and union workers are taking advantage of the taxpayers. Time to shift the tide.
At least Mayor Daley is speaking out. I wish the rest of the Democrats would fine some way around this, or better yet, have a viable Republican candidate for governor, ala Jim Edgar or Jim Thompson so we can get some common sense back into our financial situations.
“Speaking at a press conference to plug a major biotechnology conference headed to Chicago next month, Mr. Daley said McCormick Place should “get out of that business” of running shows and allow the conventions themselves to hire their own contractors and sub-contractors.”
Uh Mr. Mayor, Ummm….. McCormick Place isn’t in that business and doesn’t manage shows at McCormick Place, the conventions and exhibitors hire their own contractors.
Has anyone reviewed the report from the interim board?
http://meetinchicago.typepad.com/files/mpea-interim-board-draft-report.pdf
Clearly the McPier interim Board were treated like mushrooms.
There are many misstatements and circular logic, drawing flawed conclusions based on poor assumptions and misinformation.
* = From the interim board report
* Make McCormick Place convention center a low cost center rather than a profit center.
Profit center? McCormick Place is projecting a loss of $28,800,000 this fiscal year
* Without access to capital, MPEA has been unable to develop projects that would generate operating income to relieve competitive pressure in the convention business.
MPEA developed Focus One and catering which currently earns $22,000,000 profit a year.
* FINDINGS: To annually balance its operating budget, MPEA uses profits generated from Focus One* and its Food Service contract to offset other operating expenses. This has led to utility and food service charges that are significantly higher than experienced by our customers at other venues.
McPier prices are less than Orlando’s, just ask Crain’s to see the SPI-NPE Cost comparison and analysis.
If MPEA can reduce its reliance on catering profits, catering services could be priced below its competitors.
* RECOMMENDATIONS: The governing principle for this Board is to maximize customer satisfaction by eliminating sources of dissatisfaction that drives business away. If provided with a sufficient operating fund, the MPEA Board will immediately direct the following: Close Focus One as soon as practicable.
This is a source of 4% of customer dissatisfaction. Elimination is complete overkill. Most of the issues can be remedied on a case by case basis, this will lead to overall systemic adjustments of Focus One and its pricing and policies.
* Henceforth, all customers will bid such functions to outside electrical contractors.
Outside electrical contractors would not reduce costs. See the rates in San Francisco and Las Vegas.
* MPEA has already canceled the existing food services contract and is preparing a new RFP on a fixed fee for service basis allowing MPEA to control pricing, quality and reduce its profit margin to zero.
MPEA has invested millions of dollars in catering kitchens at McPier. Again, if MPEA can reduce its reliance on catering profits, catering services could be priced below its competitors.
* FINDINGS: MPEA is recognized as having some of the best labor talent in the convention industry. However, multiple labor jurisdictions and inefficient work rules & labor practices put MPEA at a significant competitive and cost disadvantage compared to other convention centers.
Chicago’s has the best convention labor in the country.
The labor rates must be combined with labor times to get effective labor rates. Chicago has the best effective labor rates by far, that is why they send Chicago’s labor all across the country and pay them Chicago wages, on top of the per-diems and travel costs.
* MPEA given right to review & verify contractor bi1ling statements to ensure that labor costs are accurately represented and passed through to shows/exhibitors
MPEA currently has the right to audit contractors since 2005.
* Provide the kind of “exhibitor rights” that customers experience in other convention centers.
Exhibitors should have a bill of rights that exceed the other convention centers.
A binding arbitration panel should be formed between the trade association members, the contractors and McPier to resolve issues during every show. Information and issues that arise from these arbitration panel meetings must be used to adopt better business practices, and to evolve from the current business model.
* The resulting cost savings should clearly be identified and transparently communicated to all show managers, exhibitors, and other customers.
It should be the costs, not the cost savings.
The exhibitors deserve total billing transparency. McPier needs to ban cost shifting, EAC bundling, special handling, or fees and undisclosed third-party payments by any contractors doing business at McPier.
If exhibitor charges are not clearly disclosed upfront, the exhibitor can request binding arbitration to resolve the issue.
BIO last came to town for its annual convention in 2006.
Organizers returned because “our 2006 convention was wildly successful and we loved the town,” BIO CEO Jim Greenwood said. But “the competition is stiff,” he said. “Certainly Chicago is an expensive place to hold a convention. If it becomes less expensive to hold a convention in Chicago, we’ll be more likely to come back.
“Our 2006 convention was wildly successful”.
How can that be?
What about the multiple labor jurisdictions and inefficient work rules & labor practices. I thought these practices increase the much-publicized ‘hassle-factor’ for exhibitors and show organizers operating at McCormick Place.
Has McCormick Place changed since 2006?
“If it becomes less expensive to hold a convention in Chicago, we’ll be more likely to come back.”
More likely?
Hmmm…so it is not just the expense.
“If you get a bill from McCormick Place, this costs you $50, right here,” Daley said, holding up a bottle of water. “Just to bring these four bottles here, and you look at it and say ‘$50? I could bring it in myself,’ but you can’t.”
Great PR Mr. Mayor, and oh yes, you can bring your own water to McCormick Place, and no, it does cost $50 a bottle if you order it through catering.
There are vending machines throughout McCormick Place that will sell a cold bottle of water for $2.
Great job promoting the city and McCormick Place.
Maybe a LITTLE fact checking will help next time.
Mayor Daley is doing what he has always done when a “problem” arises in the media.
Just get rid of it. Sell it, close it, whatever, all that matters is, make the problem go away.
Trying to get answers, cutting through the hyperbole, sifting through the conjecture takes too much time and energy, he is much too busy hanging out with his rich corporate friends.
By the way, if any Corporation out there covets any city owned and potentially profitable businesses unit in Chicago, this is how you get it.
Create a problem in the media, don’t worry, even if you lie about, the media won’t check. Trust me, they will take your word.
Next, The Mayor will throw his hands in the air.
Keep up the heat, keep the story going with “confidential reports”, but do not talk directly to the media.
The media will make up what information the report lacks.
Feed the conjecture, it is easier for people to believe what they think they already know.
Have your associates testify at the hearings, again, have them stay focused on the prize, don’t worry about facts or details, the media won’t ask for proof.
When the Mayor has had enough, he will just give the thing away.
Last, be ready to walk in to save the day, and scoop up all the money, and bring a BIG truck, $22,000,000 takes up some space.
The mayor is on the right track. Let a free marketplace dictate what is competitive. I would offer that making the union workers city/state employees is contrary to his overarching methodology…
The show organizer should have the right to contract all the services necessary to produce their show and determine with those contractors if there is a bill of rights and what the costs of the fees are for services provided to their exhibitors. At the end of the day, it is the show organizers marketplace and they should determine what business arrangements they want to make with what contractors, conversely, exhibitors have the ability to determine if the costs to participate in that marketplace and the benefits generate an acceptable return… It really is that simple…
This gets the city, the MPEA out of the business arrangements and puts the power in the market makers, the show organizers.
It also would put the City of Chicago at a competitive advantage as most cities have their hands in the show organizers business arrangements.
Why are the taxpayers of Illinois subsidizing Freeman and GES?
This is the bottom line from the McCormick Place interim board’s findings.
They are proposing McCormick Place should close Focus One and catering and lose $22,000,000 in profits.
Freeman and GES have publicly stated they wanted to compete against Focus One and Catering.
With no Focus One and no catering, there is no competition.
Freeman and GES will control and make this $22,000,000 in profits, as they currently do at other convention centers.
As a result of giving up these profits, McPier needs the state to replace it with $25,000,000 in subsidies.
This quid pro quo gives $22,000,000 of McPier money to Freeman and GES, which will be replaced by $25,000,000 in state subsidies.
The taxpayers in Illinois will pay these state subsidies.
Why not cut out the middleman, and give Freeman and GES $22,000,000 in state subsidies?
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